Banks have been around for hundreds of years. The first banks started out as places that held gold in deposit and gave you a receipt that you could use to get your gold back. From there, some banker got the wild idea to make the note itself transferable to other people. Paper money was born. As you can tell from this story, banks are very old institutions. Do you really need a bank anymore? Can Decentralized Finance replace your bank?
How Can DeFi Replace Your Bank?
Look at the services your bank provides: remittances, loans, savings accounts, not to mention checking accounts. You might come to realize that Decentralized Finance and cryptocurrency can carry out all of these functions.
When it comes to paying for goods, you will need to spend them somewhere that accepts cryptocurrency. There is currently not an overwhelming number of vendors and companies who do accept Bitcoin, let alone more exotic cryptocurrencies. However, as cryptocurrency grows, the adoption of Bitcoin as a payment method will increase.
How is Defi Better Than Your Bank?
Decentralized finance can offer better returns than traditional finance. The interest rate at which fiat currencies are loaned out is determined by the interest rate set by central banks. Currently, most of the interest rates around the world are near zero. Depositing your money in a traditional savings account is essentially like loaning a bank money. Since banks can get money from the Federal Reserve at a near-zero rate, they will not offer you a very good return on such a deposit.
Decentralized Finance is different though. There are many different decentralized finance platforms and they are very competitive. They have been very aggressive in giving their clients great returns. There are many people who have been holding their cryptocurrency long-term. Decentralized Finance gives them a way to loan out this cryptocurrency and create an income stream.
If you like this article, check out one of our previous in-house articles, “Decentralized Finance vs. Legacy Finance” by Census Open Finance.
When you sign up with a bank to get a loan, they will ask you for a lot of information. This information includes your name, address, and several forms of personal identification. This is in stark contrast with Decentralized Finance. Since the blockchain is permissionless, there is not any concern about who you are or what your credit score is. Even what country you’re from is irrelevant. All you need is a currency to buy cryptocurrency with and a connection to the Internet. This differs greatly from traditional banks, who might easily reject you for a loan based on your income or credit history.
Another advantage of Decentralized Finance is that it is more accountable and transparent than the traditional financial system. The traditional bank acts as an intermediary in all your financial services. When you are borrowing money, they are actually loaning you money that is loaned to them through deposits of checking or savings accounts. When you send funds to someone, the bank sits between you and the recipient and charges fees for their services. In the case of remittance, it can be a fee that’s added to the transaction itself. Banks also earn fees from overdraft privilege, returned checks and various other gotchas.
With cryptocurrency, the blockchain is a neutral third party. This means that the only fees you’ll ever have to pay for sending or receiving funds are those that maintain the security of the blockchain. For other financial services such as borrowing funds, other fees may be required. But these are typically much less than those charged in traditional finance.
The Census Note Can Be Your Crypto Checking Account
The Census Note is a cold hardware wallet that is the same size as a payment card. This makes carrying it around just as easy as carrying around any debit or credit card. The functions of sending funds, receiving funds and checking your balance can be carried out with any smartphone.
In addition to these basic functions, the Census Note will soon support decentralized finance functions like lending, borrowing and the earning of interest. This means that all the functions of a bank will soon be available in a cryptocurrency wallet the size and form factor of a payment card.
Cryptocurrency has great possibilities as it relates to liberating people from the traditional financial system. This is true not only of those who use the traditional finance system and are unhappy with it but also with those who have been poorly served or even rejected by the traditional financial system.
Decentralized Finance offers a more transparent, efficient and more accessible way to access many services that banks provide, such as lending and borrowing. The Census Note is a cryptocurrency wallet with a convenient payment card-sized form factor that offers the banking functions of checking your balance, sending funds or receiving funds. It will soon enable its users to access Decentralized Finance functions of borrowing, lending and the earning of interest.